Cells from a large precursor pool are often chosen to differentiate along specific developmental fates. In many systems, this is achieved through extensive cell-cell interactions utilizing one of many canonical signal transduction mechanisms. The cell's fate is determined, not based on its lineage, but on its immediate environment. The Drosophila eye is an excellent genetic model for understanding the molecular basis for such signaling pathways. Cells interact through the EGFR, Sevenless and Notch signaling pathways to develop into clusters of photoreceptor neurons and non-neuronal cells of the eye. The activation of the proper signaling pathway generates a mosaic of specific transcription factors within the developing field, which then determine the fate of the cells. It is the aim of this application to determine how networks of multifunctional signaling pathways create the differential expression pattern of cell-specific transcription factors. First, genetic and molecular analysis will be used to determine how one signaling pathway could initiate another in a sequential manner. The possibility that the EGFR signal activates the ligand Delta (D1) that then initiates the Notch pathway in the neighboring cell will be investigated. The mechanism by which a single transcription factor can both activate and repress genes in the same cell in response to signals will be determined by studying the negative regulation of the deadpan gene. A gene called runt that is only expressed in two photoreceptor cells in the eye, R7 and R8, will be analyzed to determine how repetitive signaling can provide the context for the expression of the same protein in precisely two cells that develop at some temporal distance. The mechanism by which a set of precursor cells can change fate while retaining their pluripotent nature will be investigated through molecular and genetic analysis of the enhancer of the lozenge gene. Finally, in a large mutant screen involving the generation of mutant clones in the eye, we will search for novel genes of developmental relevance that control the expression of lozenge (lz) and Dl, or control the developmental fate of non-neuronal cells in the eye.